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JEFF PRESTRIDGE: Inflation in a low interest rate environment is a financial nightmare for cash savers, so banks must help them out










Inflation in a low interest rate environment is a financial nightmare for cash savers. Like a mouse with cheese, inflation – now running at 5.4 per cent – nibbles away at the real value of saving, undermining the savings ethic and hitting the risk averse elderly the hardest. 

There’s little most hardened savers can do to counter this financial pest other than chase the best interest rates. Even then they’re not going to find any bank or building society prepared to pay anything near 5.4 per cent. 

Some braver souls – including many readers I speak to – have taken more decisive action, turning some of their cash savings into income-producing investments. It’s an understandable response, albeit one not without risk. 

Shrinking: Like a mouse with cheese, inflation – now running at 5.4 per cent – nibbles away at the real value of saving

Shrinking: Like a mouse with cheese, inflation – now running at 5.4 per cent – nibbles away at the real value of saving

What makes the situation worse for many entrenched cash savers is that a majority of those banks and building societies who look after their money don’t seem to care about their financial wellbeing – even when they have the perfect opportunity to give savers a little more. Disgraceful.

It is now five weeks since the Bank of England base rate was tickled up by 0.15 percentage points to 0.25 per cent. Five weeks in which savings account providers have had the opportunity to give customers a little more by way of interest. But the overall response has been lamentable, despite our decision last month to heap pressure on them by launching our Give Savers A Rate Rise campaign. 

Our stance is simple, fair and not particularly demanding: savers in variable rate accounts – especially easy access products where rates are notoriously parsimonious – should get the full benefit of the 0.15 percentage point rise. Bar a few notable exceptions, banks and building societies have refused to play ball. Profit making has been the order of the day with many savers enduring a version of Chinese water torture. 

Building societies Newcastle and Yorkshire both broke ranks last week – so hats off to them. Newcastle, the country’s eighth largest society, said that 97 per cent of members with a variable rate account would see their rate increase by 0.15 percentage points from the start of next month. It means rates on instant access accounts such as Easy Saver (Issue 3) and Easy Saver Isa will double to 0.3 per cent. 

Yorkshire is being less generous, stating it would add 0.1 percentage point of interest – not 0.15 – to a ‘majority’ of accounts where the savings rate is variable. Like Newcastle, the higher rates will kick in on February 1. Unlike it, Yorkshire has yet to identify which minority of accounts will not get the 0.1 percentage point rise. 

In Yorkshire’s defence, it does offer superior rates to many of its competitors, though it is wrong that its easy access cash Isa (Internet Saver Isa Plus Issue 9) pays an inferior rate to that offered on the equivalent non-Isa Internet Saver Plus Issue 9. It’s an anomaly that many readers have pointed out. 

As for big providers of savings accounts, the word procrastination should be embedded into their brands. On Friday, in response to enquiries about when they would be pushing up rates, delay and evasion were to the fore. 

Nationwide Procrastination Building Society said: ‘As you know, we are still working through what the base rate increase means for savers and will announce any changes in the near future.’

‘No update re [savings] rates,’ said NatWest Procrastination Bank. Lloyds was a little more forthcoming, stating it was still ‘reviewing’ what the change meant for variable rate savings customers (little in terms of more interest, I imagine). But it did confirm any changes would come into effect on February 1. 

HSBC said its savings accounts were not directly linked to the base rate – blatantly obvious if you put the piddling rate it pays on Flexible Saver (0.01 per cent) up against 0.15 per cent.

It added: ‘If there are any changes to interest rates, we will notify customers directly.’ Santander said nothing enlightening. 

Stop procrastinating and give savers a rate rise. 

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JEFF PRESTRIDGE: Leading savings expert says the way banks are treating their savers with paltry rates rises in response to base rate hikes is ‘awful’










Awful. That was the reaction from a leading savings expert after Barclays Bank broke ranks last week and finally pushed up some – not all – of its savings rates in response to last month’s hike in Bank base rate to 0.25 per cent. 

The ‘awful’ came from the mouth of Anna Bowes who, for her sins, spends her working life poring over savings rates as co-founder of rate scrutineer Savings Champion.

As Anna readily admits, it’s not a particularly enlightening occupation at the moment given the reluctance of most banks and building societies to pay savers anything other than a pittance. Anna says ‘awful’ a lot these days – and understandably so. 

Cash strapped: Savers are receiving poor returns from the hard-earned cash they have in savings accounts

Cash strapped: Savers are receiving poor returns from the hard-earned cash they have in savings accounts

The word wasn’t muttered because Barclays had broken ranks – that was commendable – but for the parsimony of its belated reaction to the 0.15 percentage point rise in base rate that was announced a month ago on December 16.

The bank, which made profits of £2billion in the third quarter of last year (up from £1.1billion over the same period in 2020), said it had increased the rate on its Instant Cash Isa from between 0.02 per cent and 0.05 per cent to between 0.05 and 0.1 per cent.

For savers with less than £30,000 in the account, it will mean a paltry 0.03 percentage point increase in the tax-free interest they receive. An extra £3 in annual interest for every £10,000 of savings, a fiver instead of two pound coins. For those with £30,000 of savings, they will now receive annual interest of £30 compared to £15 previously.

If Barclays had passed on the full 0.15 percentage point increase in base rate – as we have been demanding as part of our Give Savers A Rate Rise campaign – the equivalent interest payments would be £17 and £60. Hardly income sums to rejoice about but not as awful as what has prevailed. 

Barclays told me last week that it remained committed to providing customers with ‘a range of options to help them save for their goals,’ singling out in particular its children’s savings account (paying 1.5 per cent) and its Help to Buy Isa (1.25 per cent). What it omitted to say is that 1.5 per cent is only paid on balances up to £10,000. Above that ceiling, additional balances attract 0.01 per cent. 

What it also failed to mention is that its instant access account Everyday Saver continues to pay 0.01 per cent interest on balances up to £10million. 

In other words, £1,000 of annual interest on £10million of savings. We wait to see what it will do for these savers in the coming days. But one thing’s for sure. It won’t be much. 

Towns and villages need essential community services  

Community lies at the heart of a lot of the issues we cover in The Mail on Sunday’s personal finance pages. Although acknowledging the digital world we live in, we believe that our towns and villages should be vibrant places where essential community services – for example, a bank, post office, library and pub – are available. 

For example, it’s why we have long been flag wavers for community-style banks – bank branches run by a third party, typically the Post Office, which all customers of the major high street banks can use. 

Community is also an ethos embodied in everything that the 1,700 Rotary clubs in Great Britain and Ireland do. Comprising some 40,000 members, drawn from all walks of life, these clubs strive to improve their local communities. They do it voluntarily and regularly raise bucket-loads of money for local charities. 

Last Thursday night, I had the privilege to speak at a dinner organised by Reading Abbey Rotary, a club comprising some 40 spirited individuals. 

And it was indeed a privilege as I told them about our editorial focus on community while learning about the good work they do in Reading and its local environs. They support food banks and raise funds through the organisation of events such as 10-kilometre runs around local estates (it’s how I first got to know of the club’s existence). 

Rotarians are a force for local good. If you fancy becoming one, visit rotarygbi.org. 

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In the bag: Savings institutions are refusing to pass on the rise in interest rates

In the bag: Savings institutions are refusing to pass on the rise in interest rates

Savers are being shortchanged by £2.7billion a year because savings institutions are refusing to pass on the rise in interest rates, The Mail on Sunday can reveal

Analysis of data from the Bank of England confirms the appalling way savers are being treated by banks and building societies – despite rising interest rates in the wider economy. 

Our research shows that savers in easy access accounts are on average currently receiving a quarter of the interest they were getting when the Bank of England base rate was last at 0.25 per cent for a sustained period – from August 2016 through to November 2017.

Five years ago interest on average for easy access accounts was 0.37 per cent.

But most recent official figures show it has fallen to just 0.09 per cent. 

That means savers are earning £2.7billion a year less on the total £970billion held in these accounts. 

Even if savings institutions push up their savings rates to match last month’s 0.15 percentage point rise in base rate – which, outrageously, precious few have yet to do – it will still mean savers are receiving just 0.24 per cent – a third less in interest than they were getting in late 2016 and for most of 2017. 

The shabby behaviour of savings institutions highlighted today by this newspaper as part of its Give Savers A Rate Rise campaign has been roundly condemned by consumer champions. 

Ros Altmann, a former Pensions Minister, says banks and building societies are taking ‘unfair advantage of savers’ by paying them interest rates close to zero. 

She says they are in danger of ‘putting people off saving altogether’ and imperilling the finances of many pensioners who are seeing their income ‘disappear just when it is most needed’ as energy bills soar. 

Since we launched our campaign in the wake of the base rate rise last month, readers have contacted The Mail on Sunday in their hundreds to lambast savings institutions for not playing fair by savers.

Building societies, traditionally more customer focused than banks, have come in for widespread criticism, particularly Nationwide, the biggest. 

Last week, it hiked up mortgage rates, but said it had yet to decide what the base rate increase meant for savers. 

Readers accuse well-rewarded building society bosses – including Nationwide’s Joe Garner – of ‘riding on the backs of ordinary people who are trying to save for the future in these difficult times’ and paying ‘peanuts’ to loyal savers.

Many have lambasted savings institutions for not playing fair as rates remain historically low

Many have lambasted savings institutions for not playing fair as rates remain historically low

HOW WE CALCULATED THE RATE RIP-OFF 

The Mail on Sunday’s analysis, confirming the rotten deal many savers are getting, is based on monthly data that the Bank of England collects on the interest rates that institutions pay savers. 

In particular, we have scrutinised the data relating to ‘sight deposits’ – savings accounts where the customer has instant access to their money without penalty. 

The latest data, for the end of November last year, shows that the average interest rate on such accounts across banks and building societies was 0.09 per cent, compared to base rate of 0.1 per cent. 

Of course, most of the high street banks were (and still are) paying considerably less than 0.09 per cent – in some instances as little as 0.01 per cent. 

Even if we assume – rather generously – that rates on these easy access accounts will at some stage (possibly from the start of next month) rise by the equivalent 0.15 percentage point increase in base rate, it means that the average rate should rise to around 0.24 per cent. 

Yet it will still mean savers are being treated far more contemptuously than they were when base rate stood at 0.25 per cent for 15 months in late 2016 and most of 2017. 

The Bank of England data shows that for this period, the average savings rate stabilised at round about 0.37 per cent. In other words, current savers are likely to end up receiving a third less than back then. 

Shining light: Swansea increased rates before the Bank of England base rate went up

Shining light: Swansea increased rates before the Bank of England base rate went up

Put into pounds and pence, a saver earning the average savings rate of 0.37 per cent in 2017 would have received £37 of annual interest on £10,000 of savings. 

On the current average of 0.09 per cent, they would receive £9 and assuming a new average savings rate of 0.24 per cent – once last month’s base rate increase is factored in – £24. 

Anna Bowes, co-founder of Savings Champion, says: ‘Unfortunately – some would say outrageously – savings rates tend to fall more when base rate is cut and rise by less when it increases.’ 

She adds: ‘It continues to beggar belief that it is coming up to four weeks since base rate increased and there has been very little in the way of good news for beleaguered savers.’

How to find the best savings rates

Savings rates have been in the doldrums for many years but the situation was hugely exacerbated by the pandemic and the emergency base rate cut to 0.1 per cent.

But there are ways to ensure your cash is at least in the best of the bunch at all times. 

Checking top rates is essential, but it is also possible to make life easier overall and manage your savings pots in one place. 

Over the past few years a number of savings platforms have launched, offering savers the option to switch as and when better deals become available and manage accounts from different banks and building societies.

They each work slightly differently and include their own exclusives. To check out what’s on offer take a look yourself:

> Raisin 

> Hargreaves Lansdown Active Savings

> Flagstone  

Or you can view This is Money’s comprehensive best buy savings tables here, independently curated by savings guru Sylvia Morris:

> Compare best savings rates now 

MINNOWS SHOW THE WAY FORWARD 

Apart from NS&I, the Government’s retail arm, none of the big savings institutions have yet to push up savings rates in response to December’s increase in base rate. It has been left to the minnows to show the way forward. 

Building societies Suffolk (Ipswich as was) and Swansea have already increased rates, effective from the fourth and start of this month respectively. 

Both have matched the 0.15 percentage increase in base rate. 

Ford Money has also increased rates, albeit by only 0.1 percentage points. It means the respective rates on Easy Access and Easy Access Isa are now a competitive 0.6 and 0.5 per cent. 

Building society Scottish has tickled up its Cash Isa rate to an attractive 0.7 per cent. 

Suffolk is now paying 0.25 per cent interest on both its instant access account (Everyday Saver) and Cash Isa. 

At Swansea, the respective rates for Instant Access and Cash Isa are more generous at 0.5 and 0.55 per cent respectively. 

Swansea’s decision to increase savings rates was made before the Bank of England moved on base rate. 

In a letter posted over the Christmas period to all of its 23,000 savers, it said: ‘We are increasing all of our savings interest rates by 0.15 percentage points in anticipation of an increase in the Bank of England base interest rate over the next few weeks/ months ahead.’ 

Poll

How much cash savings do you have?

  • Under £1,000 141 votes
  • £1,000 to £10,000 304 votes
  • £10,000 to £20,000 341 votes
  • £20,000 to £50,000 704 votes
  • £50,000 to £100,000 749 votes
  • More than £100,000 1705 votes

It added: ‘Your society has enjoyed an excellent year and while the society’s board is mindful of the challenges ahead…we believe that the society is now able to increase the interest rates paid on our savers’ accounts.’ 

The society has a reputation for treating savers fairly. When base rate was cut from 0.75 to 0.25 and then 0.1 per cent in March 2020, Swansea did not cut savings rates until May of the same year in order to provide ‘more stability’ for customers. 

On Friday, chief executive Alun Williams told The Mail on Sunday: ‘It was the right thing for us to do. We gambled and we could have been under water for a while if base rate had not gone up. But we wanted to give a little cheer to our savers. It has been a terrible time to be a saver.’ 

He said the society had met two of the four key demands made by The Mail on Sunday’s Give Savers A Rate Rise campaign – namely to give the 0.15 per cent boost to all savers; and to notify all savers of the changes in writing. 

The two not met were to backdate the extra interest to December 16 (the date of the base rate change); and to tell savers of any better deals on offer (although in its defence, it did tell savers of the rates it pays on all accounts, just in case they wanted to move their money to a better paying Swansea account.) 

If only there were more savings organisations as customer focused as Swansea.

OUTRAGE OVER INERTIA ON RATES 

Readers are livid that the country’s biggest societies have yet to push up interest rates for savers. 

Hundreds of savers with money in society instant access accounts and cash Isas responded to last Sunday’s article, which revealed how much the bosses of these organisations are earning while paying paltry interest rates to customers. 

Heather Noble, a Nationwide customer for more than 30 years, is appalled at the way savers are being treated by the biggest building society in the country. 

She says: ‘Savers are getting such a poor deal from Nationwide and the annual remuneration for the boss Joe Garner [£1,236,000] is outrageous.’ 

Heather, who lives near Aylesbury in Buckinghamshire, is now retired after working in senior positions at both Rolls-Royce and Eurotunnel. 

She is also baffled by the society’s decision to launch a £1million monthly prize draw last year. 

She says it is not in the spirit of a mutually owned organisation. ‘How can giving every member’s money to a randomly selected few be fair?’ she asks. ‘I’d rather see the money used to give all savers a better deal.’ 

Chris Wilkinson, from Ferndown in Dorset, is also angry with Nationwide. He believes longstanding customers like him have been sidelined as the society has pursued new business, strived to make big profits and handed out a fortune to the chief executive in remuneration. 

‘As a saver, I want safety over risk,’ says 70-year-old Chris, a former human resources manager in the aerospace industry. 

‘So a building society is my natural home. But Nationwide isn’t the organisation it was. It used to offer loyal savers preferential savings rates according to how long they had saved. But it’s removed the tiered rates and replaced them with one single rate. It’s disappointing.’ 

Barrie Taylor, a retired newsagent from Spennymoor in County Durham, doesn’t mince his words. He says: ‘These building society bosses are riding on the backs of ordinary people trying to save for the future in these difficult times.’ 

Barry Stafford, from Cheshire, says savers have been given a raw deal for years. He says: ‘There’s a lot of money sitting inside building society accounts earning peanuts. Paying interest of 0.01 per cent is nothing short of disgraceful.’ 

Retired police officer John Chadwick, who lives just outside Portsmouth with wife Shirley, says: ‘Savers should rebel by withdrawing their money. That would wake up the societies into doing something positive for savers.’ 

He has moved most of his cash savings into low-risk stocks and shares Isas with the balance in NS&I premium bonds. 

The last word goes to Adrian Hurst, a retired IT consultant from Wigan. He says: ‘These building society bosses are lining their own pockets at our expense. Savers deserve better.’ Absolutely.

Are building societies and banks playing fair with savers? 

Banks and building societies have been busy upping mortgage rates, with Nationwide revealing a raft of rises, but savers are still waiting. 

Nationwide isn’t alone, almost all its big building society and banking rivals have also been failing savers for years – and although they blame the low interest rate environment that doesn’t stop them making bumper profits and paying out blockbuster wages to top executives. 

So, are they diddling savers or do they have any defence? 

On this week’s podcast, Georgie Frost, Lee Boyce and Simon Lambert look at how and why banks and building societies have failed to meaningfully help savers ever since the financial crisis – and whether there is any hope that things will change? 

Press play above or listen at Apple Podcasts, Acast, Spotify and Audioboom or visit our This is Money Podcast page   

Savings accounts

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HAMISH MCRAE: The tidal wave of free money that the central banks have created is coming to an end










Two things happened last week that will help shape financial markets this year. 

Both happened in America but taken together, they will also set the tone for UK investors, and indeed investors all over the world. 

One was that last Monday, the first trading day of the year, Apple shares rose and briefly valued the company at more than $3trillion.

That is an astounding amount, more than all the companies traded on the Frankfurt Stock Exchange. 

Getting chilly: A cool wind has blown across the world's financial markets in the past few days

Getting chilly: A cool wind has blown across the world’s financial markets in the past few days

But then the price came back so that by Friday’s close it was back to $2.8trillion. That was part of the wider reassessment of the value to be put on high-tech companies on both sides of the Atlantic

The other came on Thursday when the minutes of the December meeting of the Federal Open Markets Committee were published. 

This committee sets the Fed’s monetary policy, and what shocked the markets was the tone of the minutes, which suggested that the Fed might raise interest rates faster and sooner than they had expected.

Suddenly, the markets knew that the Fed was serious about combating inflation. The end of ultra-easy money was in sight. 

The yield on ten-year US Treasury bonds had risen on Friday to 1.76 per cent, the highest since the pandemic struck in February 2020. 

This has pulled up UK long rates too. Our ten-year gilts were yielding 1.15 per cent at Friday’s close, which on a long historical view is very low indeed, but is nevertheless just about the highest since May 2019. 

Calling a turn in any market is a scary business, but let’s say that it is at least a real possibility that we will not see ten-year gilts yielding less than 1 per cent this decade, conceivably much longer. We could be in the early stages of a 30-year bear market in fixed interest securities worldwide. 

Should one also call the top of the high-tech boom? That is more complicated. Start with Apple. It’s a hugely profitable company, sitting on a pile of cash

Its price/earnings ratio is currently just over 30. That is high by the standards of a few years ago, for between the beginning of 2017 and the end of 2019 it traded mostly at a P/E of between 12 and 25. But it is lower than it was at the end of 2020 when it was over 40. 

There are some US high-tech companies where the current valuations seem more the result of hopes and hype. I would put Tesla in that bracket, despite the technical and marketing genius of Elon Musk, and despite the transformation it has brought to the global motor industry. 

But Microsoft? Or Amazon? They must have a lot of profitable growth ahead. What may happen will be a sorting out of the high-tech sector, with investors working out which firms can justify their heady valuations and which are really mostly hype.

Every bull market comes to an end eventually but we have to keep our fingers crossed that the end to this one happens in a benign way. 

Apple shares rose and briefly valued the company at more than $3trillion, last Monday

Apple shares rose and briefly valued the company at more than $3trillion, last Monday

The froth has to be blown away and that will apparently destroy wealth. But actually that wealth was never really there. Should we worry about Bitcoin investors who bought at the peak? 

My answer would be no. But it does no one any good to have investors in solid enterprises lose their shirts.

It may even be that the entire edifice of things that exist only in the form of lines of computer code – non-fungible tokens (NFTs) as well as cryptocurrencies – will collapse. We cannot know. 

But what we do know is that a cool wind has blown across the world’s financial markets in the past few days, and that wind has been driven by an awareness that the tidal wave of free money that the central banks have created will be coming to an end. 

When that happens people have to figure out what is really valuable and what is not. 

I take comfort from the probability that the world is still in the early stages of a cyclical expansion. Historically, the increases in interest rates associated with these upswings have generally been good for equities. 

That is partly because the economic growth will deliver solid profits, but also because solid businesses do give some sort of protection from inflation. The Footsie, despite the bumps of the week, is up 1.4 per cent on its close on December 31 of 7,385. 

At least there is some value there. If scepticism of the high-tech valuations persists, and interest rates do indeed rise faster than expected, then solid value will be what investors will want.

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A ‘mudlarker’ who found a rare magical figure from 19th century Africa on the banks of the River Thames was stunned to find it could be worth thousands of pounds.

Experts believe the bizarre-looking but well-preserved 12ins figure of a wooden dog with metal nails protruding from its torso originated from the Congo in the late 1800s.

It would have been used by natives as a ‘mediator’ between the spirit world and the dead, allowing supernatural forces to intervene in human affairs.

It was unearthed by Nicola White, a professional ‘mudlarker’ who trawls the river bed looking for treasure. She found it in the mud at Greenwich, south east London.

Exactly how it ended up there is a mystery. One theory is that it was confiscated by Christian missionaries to Africa as evidence of sorcery and brought back to Britain.

Others have surmised that it was acquired by a superstitious sailor who threw it into the water after experiencing bad luck.

The figure, believed to be a late 19th century Nkisi Nkondi from the Congo, which was discovered by 'mudlarker' Nicola White

The figure, believed to be a late 19th century Nkisi Nkondi from the Congo, which was discovered by 'mudlarker' Nicola White

Nicola White, a ‘mudlarker’ who found a rare magical figure from 19th century Africa (pictured) on the banks of the River Thames was stunned to find it could be worth thousands of pounds 

Nicola (pictured) found the artefact in the mud of the River Thames near Greenwich and was at first afraid to touch it as she believed it looked like a Voodoo doll so did not want to disturb it

Nicola (pictured) found the artefact in the mud of the River Thames near Greenwich and was at first afraid to touch it as she believed it looked like a Voodoo doll so did not want to disturb it

What is mudlarking? 

19th century mudlark from Henry Mayhew's book, London Labour & London Poor, 1861

19th century mudlark from Henry Mayhew’s book, London Labour & London Poor, 1861

 Mudlarking as a profession started in the late 18th and then into the 19th century, and was the name given to people scavenging for things on the riverbank and selling them.

These original mudlarks were often children, mostly boys, who would earn a few pennies selling things like coal, nails, rope and bones that they found in the mud at low tide.

They are described as ‘pretty much the poorest level of society, scrabbling around on the foreshore trying desperately to make a living’ by Meriel Jeater, curator in the Department of Archaeological Collections and Archive at the Museum of London. 

A mudlark’s income was very meagre, and they were renowned for their tattered clothes and terrible stench. A mudlark was a recognised occupation until the early 20th century. 

Dr Michael Lewis, the Deputy Head of Portable Antiquities and Treasure at the British Museum, says that mudlarks’ finds can ‘alter our picture of the past. 

The mudlarks have found numerous toys (i.e. miniature plates and urns, knights on horseback and toy soldiers) that have actually changed the way historians view the Medieval period.

Over the last 30 years, the Museum of London has acquired over 90,000 objects recovered from the River Thames foreshore which is the longest archaeological site in Britain, but only a few of these artefacts are on display.

Although in 1904 a person could still claim ‘mudlark’ as his occupation, it seems to have been no longer viewed as an acceptable or lawful pursuit.

By 1936 the word is used merely to describe swimsuited London schoolchildren earning pocket money during the summer holidays by begging passers-by to throw coins into the Thames mud, which they then chased, to the amusement of the onlookers.

More recently, metal-detectorists and other individuals searching the foreshore for historic artefacts have described themselves as ‘mudlarks’. 

In London, a license is required from the Port of London authority for this activity and it is illegal to search for or remove artefacts of any kind from the foreshore without one.

However it came to rest there, the figure was preserved in the oxygen-free mud of the Thames for more than 100 years.

Ms White is now working with experts to confirm the origin of the object, with a suggestion that it could be returned to the Democratic Republic of Congo.

The mother-of-two, who also makes art from objects she finds, said: ‘The tide was out so it was half way up the bank – it was quite high up with other pieces of wood, plastic and rubbish.

‘First of all I was afraid to take it as it looked like a Voodoo doll and I didn’t want to disturb it.

‘But then a professor I know looked at photos and told me it was an important piece of art – he thinks it is a late 19th century Nkisi Nkondi from the Congo.

‘I’m so happy I found it, otherwise it just would have been washed away by the tide.

‘It wasn’t until I picked it up and took it home that I realised how unique it was.

‘It’s a carved dog sitting upright with a hole in its back where some kind of spiritual medicine would have been stored.

‘These objects were thought to have spiritual power inside them.

‘During the 19th century a lot of these objects were seized by missionaries in Africa who frowned upon them because they were unchristian.

‘I think it’s right to return it to its homeland if somebody wants it back.’

A Nkisi Nkondi, meaning spirit, was an object thought to contain supernatural forces from the world of the dead directed to intervene in human affairs.

Its power may have ranged from an ability to cure illness, offer protection from evil, and punish people who broke social contracts.

Such objects were often confiscated and destroyed by European missionaries so modern day examples are exceptionally rare.

But some were kept as objects of fascination and made their way into the homes of Western collectors.

Will Hobbs, African art specialist at Woolley and Wallis Auctioneers of Salisbury, Wilts, said that similar objects in good condition had been known to sell for hundreds of thousands of pounds before.

He said: ‘These figures can be humanoid but the animal form is called a Nkisi Nkondi Koso. They were seen as mediators between the worlds of the living and the dead – often acting as problem solvers.

‘The nails were hammered in each time an issue or problem arose in the belief that the figure would help the spirits intervene.

‘It is likely that this figure was brought back from Africa by a visiting sailor after being discarded by the original owner.

‘Given the often superstitious nature of sailors it is possible that a run of bad luck was attributed to this little-understood fetish figure and it was therefore thrown into the river to be figuratively drowned.’

Theo Weiss, an assistant curator at the Sainsbury Centre for Visual Arts, and an expert in post-colonial art, added: ‘These objects had a strong social and economic function.

‘Their power could be both positive and negative – to cause harm, in a similar way to Voodoo, or offer protection.

The figure is believed to be a Nkisi Nkondi from the Congo - mediators between the worlds of the living and the dead - often acting as problem solvers. The nails were hammered in each time an issue or problem arose in the belief that the figure would help the spirits intervene

The figure is believed to be a Nkisi Nkondi from the Congo – mediators between the worlds of the living and the dead – often acting as problem solvers. The nails were hammered in each time an issue or problem arose in the belief that the figure would help the spirits intervene 

Pictured: Nicola White, a 'mudlarker' who trawls the river looking for treasure, discovered the striking object sticking out of the bank in Greenwich, south east London when the tide was low

Pictured: Nicola White, a ‘mudlarker’ who trawls the river looking for treasure, discovered the striking object sticking out of the bank in Greenwich, south east London when the tide was low

‘They would have been made under the guidance of a spiritual healer or diviner, known as a Nganga, who acted as an adjudicator or referee in society.

‘The figures were deliberately menacing and striking – which explains why missionaries were so obsessed with them.

‘We need to figure out the circumstances of how this one left the Congo in order to determine who might want it back.

‘The most unusual thing about it is the dog shape. Most commonly, the dog figures are double headed with four eyes, reflecting their ability to see into the spirit world and our own.

‘There are two channels of repatriation – either it can be donated directly to the National Museum in the DRC’s capital, Kinshasa, or it could be donated to a museum here which will then carry out that process itself.

‘The DRC was not a British colony – it belonged to Belgium, so this could be the object to trigger a conversation between European nations about restitution which just isn’t happening right now. As it stands, there is not enough joint-up thinking.’

Pictured: 'Mudlarker' Nicola White on the banks of the River Thames with a clay pipe

Pictured: 'Mudlarker' Nicola White's other finds include 18th century cannon balls

Pictured: Nicola White near the Thames with a clay pipe and an 18th century cannon ball

The figure found in the Thames is among dozens of eclectic treasures which adorn Ms White’s home in Greenwich.

The 48-year-old gave up her career in finance to become a mudlarker, a practice which she documents on her Youtube channel.

Her finds range from 18th century canon balls to old smoking pipes, and a 200 year old flagon which belonged to Griffith Todd, whose son, Charles, built the first telegraph line across Australia.